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Cotton Import Duties

Volume 236: debated on Monday 17 March 1930

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14.

asked the Secretary of State for India whether he will lay upon the Table of the House the text of the correspondence with the Government of India respecting the proposed increased cotton duties there?

Following is the correspondence:

I.

Telegram from Secretary of State to Viceroy, dated 7th February, 1930.

With reference to the proposed increase of the Indian cotton duties, the Cabinet, at a special meeting held this morning, re-resolved that it would not be inconsistent with the procedure governing the now well recognised Fiscal Autonomy Convention to make, at this stage, the following representations to the Government of India.

First, the probability that such an additional duty would be likely to raise the price of goods in India itself to the great detriment of the poorer clashes generally in that country; and secondly, the probability that such an additional duty would have a disastrous effect in England at this moment—an effect which the Cabinet feels sure that you and your Legislature do not desire to create.

From both points of view the Cabinet views with the gravest apprehension the proposed additional duty and trusts that full weight will be given to the above considerations.

II.

Telegram from Viceroy to Secretary of State, dated 12th February, 1930.

Reference to your telegram of the 7th February. I have discussed Cabinet representation with my Council, and we are deeply impressed by a message of this nature. Nevertheless, we feel bound to adhere to our main proposals.

It must be remembered, firstly, that we want revenue; secondly, that customs is our chief source; thirdly, that general revenue tariff stands at 15 per cent. while duty on cotton piece goods is only 11 per cent.; fourthly, that Indian industry is suffering from deep depression, and that as regards Bombay, the mills are approaching a desperate position which may effect the whole future of this important centre of Indian commerce and finance. Moreover, in a year like present when we have to impose heavy new taxation, we could not for revenue purposes leave cotton duties alone.

As regards raising of cost to consumer, we believe in those goods where external competition is chiefly felt, namely plain grey shirtings and light sheetings and cheaper coloured goods, internal competition will be weapon to keep prices down. As regards bleached goods and finer quality grey and coloured goods, which Lancashire mainly supplies, a 4 per cent. increase in price cannot be represented as a crushing burden.

As regards second point in Cabinet representation—the danger to Brit shi interests—we recognise that possible decline in consumption of Lancashire goods may be a serious matter, but we are clearly bound to put India's interests first. We also recognise how important it is to India not to antagonise British opinion, and quite apart from this, we are of course concerned at this time to avoid unnecessary injury to British interests. We have carefully considered what we could do in this respect, and while we cannot modify general application of 15 per cent. revenue duty, we are prepared to propose to Assembly that, as regards any additional and temporary protective measures, their application might be limited to non-British goods, and that in these circumstances there should be imposed, in addition to 15 per cent. revenue duty, a 5 per cent. protective duty with a minimum of 3½ annas per pound on plain grey goods against all cotton piece goods from outside the United Kingdom. We should propose protective duty for three years only, and undertake to have its effects examined by Tariff Board before end of this period. We think it unlikely, having regard to immense preponderance of British imports in classes of bleached goods, of bordered grey goods and finer coloured goods, that additional duty would have any appreciable effect on prices.

In placing our proposals before the Assembly we shall point out that, so far as we are aware, this is the first occasion on which considered opinion of the Cabinet has been conveyed in this form to the Government of India, and we are impressed with significance of the precedent so established. We cannot ask the Assembly to commit themselves to Imperial Preference as a principle, but merely to adopt a particular course which in our judgment is consistent with India's interests at a critical juncture when much may depend on Indian response to British Government's appeal. We shall have to make it plain to Assembly that, while there are grounds for treating plain grey goods exceptionally, we could not in any circumstances agree at present stage, and for emergency purpose which we have in view, to an additional protective duty of five per cent. on all classes of piece goods irrespective of the country of origin, since immediate benefit to Indian producer would be wholly incommensurate with burden imposed on Indian consumer. We desire also to make it clear that in a matter of this kind after frankly stating our case we should desire to elicit the most free expression of opinion from the Legislature with whom final decision must rest.

III.

Telegram from Secretary of State to Viceroy, dated 19th February, 1930.

The Cabinet has received your telegram and recognising the position of India under the Tariff Autonomy Convention is precluded from offering any further comments on your proposals.

34.

asked the Secretary of State for Foreign Affairs what representations, if any, have been made to him on behalf of the Government of Japan respecting the imposition by the Government of India of a differential tariff on certain cotton goods imported from foreign countries; and whether he proposes to take any diplomatic action?

His Majesty's Government have received a communication from the Japanese Government complaining of the discriminatory effect on cotton goods of Japanese origin of the duties proposed by the Government of India. The Government of India, whose position in this matter is well known to the hon. and gallant Member, must necessarily be consulted before a reply can be given to the Japanese Government.

Was it made clear to the Japanese authorities that this is a matter entirely for the Government of India and that we cannot interfere?

On this matter, as I have already stated, we are in communication with the Government of India.

Is the right hon. Gentleman not going to do something to help the Japanese?